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United Therapeutics - Value

United Therapeutics Corporation
(
UTHR
) performed above expectations in the first half of 2012 and is
positioned to continue performing well through the remainder of the
year. This Zacks #1 Rank (Strong Buy) biotechnology company is
well-positioned to gain share in the pulmonary arterial
hypertension (PAH) market. In addition, the stock is reasonably
valued with a forward price-to-earnings (P/E) multiple of just
12.1.

Earnings Strength

United Therapeutics is expected to report its third-quarter
financial results on October 25. The Zacks Consensus Estimate is at
$1.24 per share with revenue of $227 million.

On July 26, the company reported second-quarter earnings of $1.43
per share, topping the Zacks Consensus Estimate by 27.7% and
beating last year's result by 20.2%.

Revenues jumped 22.8% year over year to $225.6 million and exceeded
the Zacks Consensus Estimate of $213 million. The improvement was
primarily due to the increased patients being prescribed Remodulin,
Tyvaso and Adcirca. All three products target the PAH market.

United Therapeutics is well-positioned to gain share in the PAH
market. Lead product, Remodulin, continues to look very strong in
both the intravenous (IV) and subcutaneous (SC) forms. Remodulin
sales should benefit from the approval of the IV formulation in
Europe.

The company is working on developing Remodulin for the Japanese and
Chinese markets, which would bring in incremental sales.

Upcoming Catalyst

United Therapeutics has a major catalyst coming up later this
month. The company is seeking US approval for oral Remodulin for
the treatment of PAH. A response on the approvability of oral
Remodulin should be out by October 27, 2012. Approval would be a
huge boost for the company.

Earnings Estimates on an Upswing

Over the last 90 days, the Zacks Consensus Estimate for 2012
increased 7.3% to $5.00 per share, suggesting year-over-year growth
of 23.1%. Moreover, the Zacks Consensus Estimate for 2013 increased
5.9% to $5.23, implying year-over-year growth of 4.7%.

Reasonable Valuation

In addition to a low P/E multiple, United Therapeutics' PEG ratio
of just 0.90 indicates that the stock is reasonably valued given
the expected long-term growth rate of 13.5%. A P/E ratio below 15.0
generally suggests value. The company's P/B multiple of 3.00 is on
par with the benchmark for a value stock and well below its peer
group P/B multiple of 4.23.

The chart below shows that the share price has been generally
tracking the company's earnings performance. Given the increasing
trend of the Zacks Consensus Estimate, the share price should
continue increasing.

United Therapeutics focuses on the development and
commercialization of therapeutic products for patients with chronic
and life-threatening diseases. The company's lead product is
Remodulin, an injectable formulation of treprostinil, indicated for
the treatment of PAH in patients with New York Heart Association
(NYHA) Class II-IV symptoms.

Tyvaso is an inhaled version of treprostinil. An oral version of
treprostinil (oral Remodulin) is currently under US Food and Drug
Administration (FDA) review. The third product in the company's PAH
portfolio is Adcirca (tadalafil; sold by Eli Lilly (LLY) as Cialis
for erectile dysfunction). United Therapeutics, which has a market
cap of $2.9 billion, has some early stage candidates in its
pipeline focused on the development of treatments for cancer and
infectious diseases.

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